After dramatic growth, Ashburn expects even more data centers

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ByMarjorie Censer

August 27, 2011

The sprawling warehouse-style buildings look like windowless big-box stores, except without the typical signs outside that let customers know they’ve come to the right place. For an industry that’s become one of Loudoun County’s hottest, computer data centers keep a very low profile.

Many are protected by the latest in security technology, often requiring a fingerprint scan to enter. Inside, racks of computer equipment are kept dark and cold, and the facilities are equipped with massive generators to ensure they always have power. A new facility being built by Sacramento-based RagingWire, for instance, is set to provide more than 14.4 megawatts — enough to power 3,600 homes on a hot summer day.

With dozens of these centers, once-rural Loudoun County has remade itself into an information technology powerhouse.

Data center building is surging in the county as existing firms expand and newcomers from outside the region plant their flags in the ground. A company called Equinix in late July announced plans to build its 10th center locally. Seattle-based Sabey Data Center Properties said in June it would build a 490,000-square-foot campus, while RagingWire said in May that it has bought a 140,000-square-foot facility, marking its move to become a national player. The county is also home to centers run by coveted firms such as Facebook, Microsoft and Amazon.

For Loudoun County, the boom has provided an economic boost. Those in the industry say the centers are a perfect fit for an outer suburb cautious about growth but in need of tax revenue. Data centers typically employ few, meaning they don’t increase traffic, but take up plenty of real estate.

The county now claims about 40 centers comprising roughly 4 million square feet of space — equivalent to 22 Wal-Mart Supercenters. Another 800,000 square feet are either planned or being built. Loudoun officials said they expect 6.5 million square feet in data centers by 2021.

“We don’t really see any end in sight,” said Buddy Rizer, a business development officer at Loudoun County’s economic development office.

The area also has become a critical one in the data center world. Carpathia, which provides hosting services, last year moved its headquarters to a larger office in Sterling to allow for growth and be more visible. The firm started with a single facility in Ashburn in 2003, but now has seven data centers in the area — five of which are based on Equinix’s campus.

“The Dulles corridor is a premiere corridor in the technology industry,” said Mike Clemson, Carpathia’s senior director of facilities. “It was definitely a statement from the company.”

AOL’s role

Loudoun County became a focal point for data center growth in the second half of the 1990s, when AOL established its Dulles campus and major telecommunications players relocated operations nearby to manage Internet traffic. Much of that data had previously passed through a Tysons Corner site, but an increase in traffic demanded more space.

The Loudoun site, known as MAE East, became a nerve center for all East Coast Internet communications, acting in effect as a doorway to the Internet. As a result, the area attracted firms that saw a new market for managing all that data.

When the local telecommunications industry went belly up in the late 1990s, data center expansion in the area came to a near halt. But the business began to pick up in 2006 as the amount of data coursing the Internet surged. More companies needed additional capacity and — as a result — additional space to house their servers.

The companies that build and support data centers take many forms. Some lease or sell space and manage the operations. Others provide the facilities and let their clients maintain the equipment inside. Still others serve as subcontractors to companies that build the centers themselves.

Though some established companies such as Washington-based Dupont Fabros already had a Loudoun presence, others — such as the well-known Digital Realty Trust — streamed in.

Loudoun was primed for the growth. County officials saw data centers as an opportunity and were ready to fast-track the development process, while Dominion Power was known as a power company with fairly cheap utility rates and reliable power.

Now, less than five years later, most major data center providers have a presence in Ashburn — and more are arriving.

Denver-based Latisys opened up its first East Coast data center campus in Ashburn last year. The company now has two buildings totaling 123,000 square feet, said Peter Stevenson, chief executive of Latisys.

He cited the responsiveness of the county, as well as the expansive local market of technology firms, systems integrators and government agencies.

“I’ve found this market to be a market where companies want to have a footprint,” Stevenson said.

Room to grow?

For its part, the county said it has plenty of land for new centers and Virginia authorities have sought to provide construction incentives by offering a sales and use tax exemption for centers that meet certain requirements.

Industry officials are optimistic, despite the federal government’s recent move to consolidate its data center operations by closing as many as 800 centers nationally by 2015.

George C. Newstrom, president and chief operating officer with Fairfax-based Lee Technologies, which designs, builds, operates and maintains data centers, said many of the data centers set for closure are older facilities that are inefficient and outdated.

Closing those should not have an effect on the growing capacity needs of both the government and commercial businesses, he said.

For now, Rob Faktorow, executive vice president at CB Richard Ellis, said data centers have extremely low vacancy because demand has kept up with supply.

“It’s very different than the office market, which across the country just is struggling with oversupply and lack of demand,” he said. “Data centers are providing access to the Internet. It’s really simplistic, but it’s really what’s happening, so I don’t know what’s going to change that in the short term.”